Centrica plc (Centrica) and Stadtwerke München GmbH (SWM) have reached an agreement to combine Centrica’s European oil and gas exploration and production (E&P) business with Bayerngas Norge AS (Bayerngas Norge) to form a newly incorporated joint venture (JV) to create an independent E&P company.
The JV will have two shareholding entities; Centrica will own 69% and Bayerngas Norge’s existing shareholders, led by SWM and Bayerngas GmbH, will own 31%.
The JV will create a strong and sustainable E&P business by combining Centrica’s cash-generative and relatively near-term production profile with Bayerngas Norge’s more recently on-stream producing assets and development portfolio. The strategic rationale for the transaction is similar for both Centrica and SWM:
- Like-minded shareholders with strategic alignment on the role of E&P.
- Combines a complementary mix of producing and development assets with strong positions in the UK, Netherlands, Norway and Denmark.
- Creates a robust, self-financing entity with an attractive financial profile, enabling organic and inorganic reinvestment and distributions.
- £100 million - 150 million of net present value (NPV) expected through synergies from cost savings and portfolio optimisation.
- Provides the opportunity to strengthen the entity through further consolidation and joint ventures, including the potential for an initial public offering (IPO) in the medium-term.
Iain Conn, Group CEO of Centrica plc, said: “As part of our strategy of 2015, we have been aiming to develop a more focused and stronger E&P business which will contribute to the resilience of the Group while limiting Centrica’s E&P participation. Alongside the recently-announced disposals of our Canada and Trinidad & Tobago assets, this joint venture creates a larger, more sustainable and more capable European E&P business and brings together like-minded shareholders who have a shared strategic vision on the role of E&P.”
“As one of the largest independent E&P companies in northwest Europe, the new entity will have the possibility to participate in further consolidation and joint ventures, and creates future optionality for Centrica’s shareholders.”
Florian Bieberbach, CEO of Stadtwerke München, said: “We are convinced that by combining our E&P activities we will create an even stronger and more sustainable business. With its similar background and strategy, Centrica is an ideal partner to develop and grow this joint venture together.”
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/18072017/bayerngas-norge-and-centrica-to-create-joint-venture/